Monday 19 October 2020

Column: Hedge funds see OPEC+ offsetting recession risk - Kemp | Reuters

Column: Hedge funds see OPEC+ offsetting recession risk - Kemp | Reuters
Hedge funds are reducing their risk exposure to crude oil and refined products against a backdrop of increasing uncertainty over a resurgence in the coronavirus and potential double-dip recession.

However, fears over the impact on oil consumption are offset by the growing likelihood that OPEC+ will postpone its output increase scheduled for the start of next year and signs that refiners are reducing excess stocks of distillates.

Hedge funds and other money managers purchased the equivalent of 31 million barrels in the six most important petroleum-linked futures and options in the week to Oct. 13.

Portfolio managers sold the equivalent of 12 million barrels of existing bullish long positions but repurchased 43 million barrels of previous bearish short positions, reducing exposure on both sides of the market (tmsnrt.rs/3dFwLhB).

In terms of net changes, funds were buyers of Brent (+38 million barrels) and European gasoil (+5 million) but sold NYMEX and ICE WTI (-9 million) and U.S. gasoline (-2 million) while leaving U.S. diesel unchanged.

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